Safepoint lifts Nature Coast Re cat bond target to $165m-$225m

U.S. primary insurer Safepoint Insurance Company is the latest to seek to upsize a new catastrophe bond issue, with the target for named storm reinsurance protection from the Nature Coast Re Ltd. (Series 2023-1) issuance lifted to between $165 million and $225 million, we understand.

Safepoint returned to the catastrophe bond market in October, with a target to secure at least $150 million of reinsurance protection from the capital markets, for protection against losses from named storms affecting Florida and Louisiana.

It’s the first cat bond since 2019 for Safepoint and so encouraging to learn that the insurer may increase the size of the transaction.

We’re now told the Nature Coast Re cat bond issuance could be anywhere from $165 million to as much as $225 million in size, across the two tranches of notes being issued.

The Nature Coast Re 2023-1 cat bond will provide reinsurance to both Safepoint Insurance Company and its solely Louisiana focused entity Cajun Underwriters Reciprocal Exchange, providing protection for named storm losses in the states of Florida and Louisiana on a per-occurrence and indemnity trigger basis, across a three-year term to November 30th 2026.

At launch, both tranches of notes on offer were targeted to be $75 million in size.

Now, we’re told there is a likelihood the lower-risk tranche of notes grows, while the higher-risk layer may struggle to achieve the original target size, but overall the issuance is expected to grow.

As it now stands, we understand the Class A tranche of notes, which are the lower-risk layer with an initial expected loss of 0.93%, are being pitched at between $125 million and $150 million in size.

The Class A notes had initial spread price guidance of 9% to 10%, which we’re now told has been fixed at the upper-end of 10%.

The Class B notes, which are riskier and have an initial expected loss of 1.60%, are now targeted at between $40 million and their original $75 million size, we understand.

While the Class B notes originally had spread price guidance of 11.5% to 12.5%, but we now understand this to have been raised and fixed at 13.5%.

Again, there is a clear demonstration of investors demanding a certain level of return here, but also of a sponsor maximising its opportunity across the issuance and now looking set to secure a significant slice of reinsurance from the capital markets.

You can read all about this new Nature Coast Re Ltd. (Series 2023-1)  catastrophe bond from Safepoint as well as details on every other cat bond ever issued in the extensive Artemis Deal Directory.